From a valuation standpoint, how does IT stack up and would you be also looking at a lot of the midcap IT names?
Neeraj Dewan: We were looking at midcap IT but after the correction in largecap IT, it makes sense to invest more in IT largecaps. The last quarter’s numbers were pretty good and even the deal wins are good. Stocks like TCS,
, Oracle have corrected a little more than 10%. That is a good entry for a lot of investors who had missed the rally earlier. Even now, some of the valuations are not cheap even after the correction. But if you go stock specific, something like HCL Technology would be the better of the lot, valuation wise. We have seen a very good traction in the numbers there and they have a very good deal pipeline going ahead.
In the largecap, I would prefer stocks like HCL Technology and in the midcaps also, there are a lot of opportunities right now because of the correction. But my tilt would be more towards largecap IT.
Where are you sensing opportunity within speciality chemicals and pharmaceuticals?
From now, it is going to be very stock specific in the specialty chemical and pharma companies. I do like some of the chemical companies like Gujarat Fluorochem.
Even in the pharma space, there are largecap companies like Divi’s Lab which are into API or Laurus Lab which offer good opportunities even after the runup. The incremental earnings will keep on happening for these and while the scale keeps going up, the profitability definitely takes a bigger up move from here on.
I am still very positive on pharma, specifically API manufacturers. In chemicals also, one has to be stock specific and besides this, the economy stocks are where we are seeing the kind of move that we have seen in some of the economy related companies’ order flows. That is where the real opportunity can come about going ahead.
